Peeless Securities Ltd, Kolkata V. C.I.T - I,kolkata, Kolkata

ITA 946/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4183 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 14-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2013
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Fair market value; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI N.V.VASUDEVAN, JM & DR. A.L.SAINI, AM ./ ITA NO.946/KOL/2013 ( / ASSESSMENT YEAR:2008-2009) PEERLESS SECURITEIS LTD. 1, CHOWRINGHEE SQUARE, 2 ND FLOOR, ESPLANADE, KOLKATA-700069 VS. CIT, KOLKATA-700069 ./ ./PAN/GIR NO. : AABCP 5069 Q ( /APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI SANJAY BHATTACHARYA, AR /REVENUE BY : SHRI G.MALLIKARJUNA, CIT DR / DATE OF HEARING : 23/11/2016 /DATE OF PRONOUNCEMENT 07/12/2016 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAIN ING TO THE ASSESSMENT YEAR 2008-2009, IS DIRECTED AGAINST THE ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX, KOLKATA U/S.263 OF THE I.T.ACT, DATED 26.03.2013, WHICH IN TURN ARISES OUT OF AN ORDER PA SSED BY THE ASSESSING OFFICER (AO) U/S.143(3) OF THE INCOME TAX ACT, 1961 , ( IN SHORT THE ACT) DATED 27.12.2010 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2008-2009 ON 3 0.09.2008 DECLARING A TOTAL INCOME OF RS.43,39,270/- WHICH WAS ASSESSED U/S 143(3) OF THE INCOME TAX ACT, 1961, ON 27.12.2010 AT AN INCOME OF RS. 47,89,120/-. ON EXAMINATION OF ASSESSMENT RECORD IT IS OBSERVED THA T THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 21,87,651/- BEING 'DIMINUT ION IN VALUE OF STOCK ITA NO.946/13 PEERLESS SECURITIES LTD. 2 IN TRADE' IN THE PROFIT & LOSS A/C FOR THE A.Y. 200 7-08, WHICH WAS ALLOWED BY THE ASSESSING OFFICER. HOWEVER, AS PER NOTES ON ACCOUNTS [SCH.16(1)(F)], SECURITIES ACQUIRED WITH THE INTENT ION TO TRADE ARE CATEGORIZED AS STOCK IN TRADE AND ARE VALUED AT LOW ER OF COST AND FAIR MARKET VALUE AND IT IS OBSERVED FROM 'SCHEDULE 7:- STOCK-IN-TRADE (AT LOWER OF COST AND FAIR VALUE). AS PER THE BALANCE SHEET AS ON 31 ST MARCH, 2008, THE MARKET VALUE AND BOOK VALUE OF STOCK-IN-T RADE IS THE SAME I.E. RS.1,05,83,434/-. HENCE, APPARENTLY ANY DEDUCTION O F 'DIMINUTION IN VALUE OF STOCK IN TRADE' DOES NOT ARISE. THE A.O. FAILED TO OBSERVE SUCH FACT AND EXAMINE THE ISSUE RESULTING IN UNDERASSESSMENT OF I NCOME BY RS.21,87,651/-. LD. COMMISSIONER OF INCOME TAX HELD THAT ON EXAMINATION OF ASSESSMENT RECORDS IT IS FURTHER OBS ERVED FROM CLAUSE 21(B) OF TAX AUDIT REPORT THAT THE ASSESSEE DEBITED RS.4,87,967/- ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT AND PAID ONLY RS.32,200/-. BUT IN ITS COMPUTATION OF INCOME RS.4,36,866/- AND RS.1,19,978/- WERE ADDED AND SUBTRACTED FROM THE INCOME BY THE ASSESSE E WHICH WAS ACCEPTED BY THE A.O. WITHOUT APPLICATION OF MIND. L D. CIT HAS ALSO OBSERVED THAT ASSESSEE HAD CLAIMED IN COMPUTATION OF INCOME REBATE U/S 88E TO THE EXTENT OF RS.8,91,083/- AND IN THE RETUR N OF INCOME TO THE EXTENT OF RS.12,41,978/-. HOWEVER, IN THE ASSESSMEN T ORDER THE ASSESSING OFFICER ALLOWED REBATE OF RS.12,43,092/-. THUS EXCESS ALLOWANCE OF REBATE RESULTED IN UNDERCHARGE OF TAX RESULTING INTO THE ASSESSMENT ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE ITA NO.946/13 PEERLESS SECURITIES LTD. 3 REVENUE. THEREFORE, THE LD. CIT HAS EXERCISED THE J URISDICTION U/S.263 OF THE INCOME TAX ACT AND HAS PASSED THE ORDER OBSERVI NG THE FOLLOWINGS :- 16. CONSIDERING THE ABOVE FACTS AND THE JUDICIAL P RONOUNCEMENTS IT IS CONCLUDED THAT THE AO HAD FAILED TO APPLY HIS MI ND TO THE FACTS AND RELEVANT LAW AND THEREFORE ORDER PASSED BY THE AO IS ERRONEOUS AND PRE-JUDICIAL TO THE INTEREST OF REVEN UE. THEREFORE, THE SAME IS SET-ASIDE WITH THE DIRECTION TO THE AO TO C ARRY OUT THE NECESSARY EXAMINATION AND VERIFICATIONS OF THE FACT S AND PROVISION OF LAW AND ASSESS THE INCOME OF THE ASSESSEE DE-NOV O INCLUDING THE ISSUE OF ALLOWANCE OF DEDUCTION OF 'DIMINUTION IN THE VALUE OF STOCK', ALLOWANCE OF PROVISION FOR GRATUITY AND REB ATE U/S 88E AS DISCUSSED IN PARAGRAPH 1, 2 & 3 ABOVE. THE A.O. SHO ULD GIVE DETAILED REASONS FOR HIS FINDINGS AND KEEP ALL RELE VANT EVIDENCES ON RECORD FOR FUTURE REFERENCE. THE A.O. SHALL GIVE RE ASONABLE OPPORTUNITY TO THE ASSESSEE. 3. AGGRIEVED FROM THE ORDER OF CIT, PASSED U/S.263 , THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUND S OF APPEAL :- 1) THAT THE COMMISSIONER OF INCOME-TAX WAS WRONG IN HOLDING THE ASSESSMENT ORDER DATED 27-12-2010 PASSED U/S 143(3) FOR THE ASSESSMENT YEAR 2008-09 AS ALLEGEDLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THUS HE ERRED IN SETTIN G ASIDE THE SAID ASSESSMENT ORDER BY WAY OF REVISION UNDER SECTION 2 63. 2) THAT WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUND NO.1 ABOVE, THE COMMISSIONER OF INCOME-TAX WAS WRONG IN DIRECTING THE ASSESSING OFFICER TO ASSESS THE INCOME OF THE APPEL LANT DE NOVO. 3) THAT WITHOUT PREJUDICE TO THE CONTENTIONS RAISED IN GROUNDS NOS. 1 AND 2 ABOVE, THE COMMISSIONER OF INCOME-TAX WAS W RONG IN NOT PROPERLY APPRECIATING THE APPELLANT'S EXPLANATIONS IN REGARD TO THE DIMINUTION IN VALUE OF STOCK-IN-TRADE AND THUS HE E RRED IN OBSERVING THAT ALLEGED LACK OF APPLICATION OF MIND AND PROPER EXERCISE OF CAUTION BY THE ASSESSING OFFICER HAD ALLEGEDLY REND ERED THE ASSESSMENT ORDER TO BE LIABLE FOR REVISION U/S 263. 4) THAT WITHOUT PREJUDICE TO THE CONTENTIONS RAISED IN GROUNDS NOS. 1 AND 2 ABOVE, THE COMMISSIONER OF INCOME-TAX WAS W RONG IN NOT APPRECIATING THE FACT THAT THERE HAD NOT BEEN ANY C ASE FOR DISALLOWANCE OF RS.1,39,079 IN RELATION TO LEAVE EN CASHMENT AND THUS HE ERRED IN CONSIDERING THE ASSESSMENT ORDER A S ALLEGEDLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 5) THAT WITHOUT PREJUDICE TO THE CONTENTIONS RAISED IN GROUNDS NOS. 1 AND 2 ABOVE, THE COMMISSIONER OF INCOME-TAX WAS W RONG IN NOT APPRECIATING THE FACT THAT THERE HAD NOT OCCURRED A NY EXCESS ITA NO.946/13 PEERLESS SECURITIES LTD. 4 ALLOWANCE OF REBATE U/S 88E TO THE EXTENT OF RS.7,5 5,125 AND THUS HE ERRED IN HOLDING THE ASSESSMENT ORDER TO BE ALLE GEDLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 6) THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL AT OR BEFORE THE HEARIN G OF THE APPEAL. 4. LD. AR FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE ASSESSEE HAS FILED AN APPEAL BEFORE THE COMMISSIONER OF INCO ME TAX (APPEALS) AGAINST THE ORDER PASSED BY THE AUTHORITIES BELOW U /S.143(3)/263. THE AO HAS PASSED THE FRESH ORDER, AFTER GIVING AN OPPORTU NITY TO THE ASSESSEE, AS PER THE DIRECTIONS GIVEN BY THE LD. CIT. THEREFO RE, ASSESSEE IS IN APPEAL BEFORE THE CIT(A) AGAINST THE ORDER PASSED B Y THE AO AS PER THE DIRECTION GIVEN TO HIM BY THE CIT U/S.263. AS THE C IT HAS DIRECTED TO THE AO TO MAKE A FRESH ASSESSMENT AFTER GIVING REASONAB LE OPPORTUNITY TO THE ASSESSEE, THEREFORE, THE ASSESSEE IS IN APPEAL BEFO RE THE CIT(A) AGAINST THE ORDER OF AO, WHICH WAS PASSED BY THE AO AS PER THE DIRECTION GIVEN BY THE CIT U/S.263. 4.1 LD. AR FOR THE ASSESSEE HAS SUBMITTED THAT ORDE R U/S.263 OF THE ACT IS NOT IN ACCORDANCE WITH LAW. 5. ON THE OTHER HAND, LD. DR FOR THE REVENUE EVEN A GREED WITH THE SUBMISSION MADE BY THE LD. AR FOR THE ASSESSEE. 6. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE APPEAL UNDER CONSIDERATION NEEDS TO BE DISMISSED, AS THE ASSESSEE HAS ALREADY FILED AN APPEAL BEFORE THE CIT(A) AGAINST THE ORDER PASSED BY THE AO U/S.143(3 ), AS PER THE DIRECTION ITA NO.946/13 PEERLESS SECURITIES LTD. 5 GIVEN BY THE LD. CIT IN THE ORDER PASSED U/S.263 OF THE ACT. CONSIDERING THE ABOVE FACTUAL POSITION, WE DISMISS THE APPEAL F ILED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE ON ALL THE GROUNDS IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07/1 2/2016. SD/ - (N.V.VASUDEVAN) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; $% DATED 07/12/2016 & ()* /PRAKASH MISHRA , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) & ' , / ITAT, 1. / THE APPELLANT-PEERLESS SECURITIES LTD. 2. / THE RESPONDENT.-CIT, KOLKATA-I, KOLKATA 3. 4 ( ) / THE CIT(A), KOLKATA. 4. 4 / CIT 5. 56 7 8 , 8 , / DR, ITAT, KOLKATA 6. 7 9 / GUARD FILE. 5 //TRUE COPY//